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Iron ore slumps near $US40

Issued at 2016-01-24



The price of iron ore has slipped for a second day as investors fret about global growth.

At the end of the latest session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US40.50 a tonne, off 1.5 per cent from its prior close of $US41.10 a tonne.

The action came on the heels of a wild session of trade on Wall Street yesterday, with a major sell-off in risk assets.

The red numbers turned green overnight after European Central Bank boss Mario Draghi hinted at more stimulus measures, though iron ore markets had closed too early to reap any benefits.

The market action — which saw European stocks jump 2 per cent, oil surge 5 per cent and base metals in London bounce between 1 and 2 per cent — bodes well for a recovery in iron ore tonight.

Heavyweights of the sector, such as BHP Billiton (BHP) and Rio Tinto, enjoyed a strong showing on stock exchanges with the improvement in risk appetite that followed Mr Draghi’s commentary.

BHP shares soared 10.6 per cent in London, while Rio Tinto shares bounded 5 per cent higher.

The share prices of both firms have been hammered through iron ore’s 18-month bear market, which shows no signs of ending just yet amid fears of a supply-demand imbalance given rising supplies from major players in the sector and a slowdown in China.

There was a minor dose of good news this week, however, as BHP trimmed its output outlook and Rio’s forecasts came in a touch below market estimates.


Source: The Australian



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